On Thursday, in connection with the Annual Meetings of the World Bank Group and the International Monetary Fund, the Intergovernmental Group of Twenty-Four (G-24) issued a communiqué on monetary affairs and development. Ambassador Marcos Galvão, Secretary for International Affairs at the Ministry of Finance, representing Brazil, served as the Chairman.

The finance ministers of the G-24 noted that “the pace of global recovery has weakened and become more uncertain” since the their last meeting, and has become “more sluggish in advanced economies, with many facing a vicious cycle of weak sovereign balance sheets, high unemployment and lack of consumer confidence, and continued fragility in the financial sector.”

The ministers noted that the “simultaneous and broad-based fiscal consolidation that is presently underway in many advanced economies poses considerable risks of a downward spiral in global demand,” and “expressed concern about the impact of the growing divergence in monetary policy between advanced and developing countries.” In particular, the ministers stated that emerging markets and developing countries “cannot be the sole engines for the global recovery.”

Persistent uncertainties in the global economy and the divergent policy trends have made macroeconomic coordination and cooperative action as important, according to the finance ministers. They also welcomed the G-20 mutual assessment framework and process, and asked that the framework “take into account the needs of all developing countries.”

Ministers welcomed the efforts underway to strengthen financial regulation, in particular through the work of the Financial Stability Board and the Basel Committee. They viewed the new capital and liquidity frameworks as an important step, but noted that much more needs to be done. Ministers also called for “appropriate calibration and adaptation of the new rules to the circumstances and needs of developing countries including the smooth functioning and deepening of credit markets and the cost of credit.”

Among other matters, ministers agreed on the need to “strengthen both bilateral and multilateral surveillance,” with the most important remaining step being “effective and even-handed surveillance of systemically important advanced countries and markets.” Ministers supported the steps being taken to “enhance surveillance of global and systemic financial vulnerabilities and analyze spillover effects of major countries’ policies, and called for further actions to integrate financial sector analysis into surveillance.” Ministers welcomed the steps taken to enhance the IMF’s lending toolkit as part of the efforts to strengthen global financial safety nets.